Why Amazon has been pulled into legal wrangle around bogus self-employment

Exploitation of gig economy workers has previously seen Uber and Deliveroo make headlines and now Amazon is under the legal microscope

Last year’s Taylor Review put Britain’s gig economy on the firing line, exposing exploitation of self-employed workers in companies like Uber and Deliveroo. The government’s analysis sought new self-employment rights for gig economy workers including sick pay, holiday time and other benefits enjoyed by traditional employees.

However, reformation is futile when those seemingly eligible are in practice treated as employees but without receiving the entitlements – something GMB, the union for gig economy workers, has now sued Amazon delivery companies over under the charge of bogus self-employment.

During its annual congress in Brighton, GMB waged legal action against three Amazon delivery companies including Prospect Commercials , Box Group and Lloyd Link Logistics on behalf of their couriers. The move alleges workers are labelled as self-employed while legally fitting the definition of employed, so rights including the minimum wage and holiday pay have been denied.

The problem is convoluted, according to Lara Keenan, partner at Globalaw, the law firm network. “All employees are workers but not all workers are employees,” she said. “While the distinction is key, as employees have rights such as the right to claim unfair dismissal, or maternity leave that workers do not, legally there is a grey area between the two.”

It’s clear why companies are keen on appointing self-employed workers – it eliminates beneficial obligations, which can make for profitable business. Amy Richardson, associate solicitor at Coffin Mew, the law firm, explained: “If the drivers are self-employed then they have very few rights but if in fact they are found to be employed by the delivery companies then those companies will lose their margins because they will have to pay more in terms of holiday pay, rest breaks etc.”

Unlike employees, the self-employed opt for less restricted duties, with flexible contracts being commonplace as well as self-determined hours in exchange for fewer entitlements. However, the temptation appears too strong for businesses like Amazon, which is said to have outlined how drivers operate, to have their cake and eat it. GMB described one self-employed driver departing at 6am only to return by 11pm as scheduled by Amazon. Regardless of being treated like an employee, the man saw wage deductions of £1 per undelivered package.

Like any new breakthrough there’s always a period of frenzy to contain the landslide and distinctions in modern employment are no different. “The gig economy has exploded in recent years and there are a number of cases working their way through the courts to determine the issue of employment status,” said Paul Kelly, employment law expert at Blacks Solicitors, the law firm. “Consequently the government identified the need to update UK employment legislation to ensure that it is fit for purpose in this brave new world of working driven by technological advancement.”

Likewise businesses should have spyglasses extended to emerging trends just as much as the government. Indeed, if Cambridge Analytica taught us anything, it’s that muddying the water reflects a mess of problems. “Don’t think that simply calling workers ‘self-employed’ or having a contract that calls them independent contractors means that individuals do not have employment rights,” Kelly continued. “You need to look at how the arrangement works in practice. If in reality the worker is an employee in all but name then employee status, or at the very least ‘worker’ status, will most likely be inferred.”

Not enough can be said for transparency in unclear territory, as Keenan added: “As the gig economy continues to grow and develop due to a demand on both sides for increased flexibility, organisations will need to ensure that they and their workers and employees understand their rights and the type of employment status being offered.

Ultimately, the gig economy model needs to be built on mutual and beneficial gain for both organisations and workers. It should also be kept under review to ensure that the working arrangements match what has been agreed and to keep an eye on future developments as the law tries to keep up with this fast-moving area.”

As businesses try to grapple with the increasing importance of self-employment the gig economy may see even more government attention, should GMB’s case come to fruition.

About the Author

With a keen eye for politics as news editor of his university’s publication, Angus can often be found scanning the horizon for the next big waves crashing against business shores. To hone his skills, he has taken on the mantle of editorial intern with Elite, which makes up the time when he's not studying or setting sail at Radio Caroline, the former pirate station.